Suppose health-care reform Y makes it unlawful for insurance companies to deny insurance to persons with a preexisting disease and sets a fine for those people who do not buy insurance.  It follows that if the fine is   a.  larger than the benefits derived from not buying insurance right away, then people will not buy the insurance and pay the fine.     b.  smaller than the benefits derived from not buying the insurance right away, then people will not buy the insurance and pay the fine.     c.  There is not enough information provided to answer this question.     d.  larger than the benefits derived from not buying insurance right away, then people will buy the insurance right away and not pay the fine.

Q: will generate $1.82 million per year (starting at the end of the first year) in perpetuity.…

A: Net present value is the difference between the present value of cash flow and initial investment…

Q: A $1000 par floating rate note pays a coupon rate of 180-day LIBOR plus a quoted margin of 1.5%…

A: A floating rate note (FRN) is a bond in which the investor will receive coupons from the issuer at…

Q: Calculate the value of the bond. b.  How does the value change if the​ market's required yield to…

A: Information Provided: Coupon rate = $70 Par value = $1000 Bond maturity = 18 years YTM on…

Q: At i= 18%, what is the annual-equivalence amount for the infinite series shown next? 5 Click the…

A: The annual value method is used to compare different alternatives. It calculates the equivalent…

Q: According to our authors, when is the purchase of stock in one company by another classified as a…

A: Trading security- Classification of securities- There are three different classification: a) held…

Q: If you owe $5,000 on a credit card that charges 18.99% apr and you decide to put no more charges on…

A: Loans are paid by monthly payment that carry the payment of interest and payment of principal amount…

Q: [S1] The longer the time to expiration, the less valuable the option is. [S2] The more volatile the…

A: Solution:- Option value means the price at which the option trades in the market. It depends on the…

Q: OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $505 million,…

A: Net present value (NPV) is the value of all the cash flow of the investment (positive and negative)…

Q: Pybus, Inc. is considering issuing bonds that will mature in 23years with an annual coupon rate of 9…

A: A bond is a debt instrument issued by a company. The value of a bond is the present value of all…

Q: How can a developer create value over and above their project cost when attempting to obtain…

A: Project cost refers to the cost that is incurred on purchasing, acquiring, extending, repairing,…

Q: Compute the pay back, discounted pay back, NPV and IRR of the following projects; Assume a discount…

A: Discount rate 10%     Year Project A Project B Project C 0 -2000 -2000 -2000 1 500 500 1800…

Q: Narrate five major differences in stocks and bonds.

A: Stock refers to the holding of the shareholders in a company that is described as the subscribed…

Q: ADB's current share price is Rs20 and it is expected to pay a Rs1 dividend per share next year.…

A:

Q: The following details are provided by a manufacturing company: Investment Useful life Estimated…

A: Payback period means period which is needed to recover initial investment.There is also discounted…

Q: (Bond valuation) A bond that matures in 15years has a ​$1,000 par value. The annual coupon interest…

A: Maturity period (p) = 15 years Par value or maturity value (Z) = $1,000 Coupon rate = 0.13 or 13%…

Q: machine has a first cost of P800,000 and a salvage value of P50,000 at the end of its life after 10…

A: The return on investment is the profit earned annually above the annual cost of operating on initial…

Q: how did you get the yield on debt

A: The yield on Debt: It represents the rate of return expected by the debtholder if the debt…

Q: Discuss the main features of Capital Asset Pricing Model (CAPM) and comment on the validity of the…

A: The capital asset pricing model is a risk adjusted model which will be helpful in finding the…

Q: Natsam Corporation has $291 million of excess cash. The firm has no debt and 526 million shares…

A: A firm is at liberty to take a decision on how to disburse the excess cash at hand. It may decide…

Q: If you need to pay $12,000 after 7 years for the money you borrowed from a friend, how much will you…

A: To calculate the loan amount we will use the below formula   Borrowed amount = MV/[1+(r/m)]t*m Where…

Q: 1.) Accounting measures of performance Consider an asset with the following cash flows: Cash flows…

A: Book Rate of Return is calculated as the ratio of the book income of the firm to the book asset.…

Q: How much would you pay for a zero coupon bond with a par value of $1000, a maturity of 21 years, if…

A: Zero coupon bond is a type of bond which will not pay with any coupon payment and it will only pay…

Q: According to our authors, what are land improvements?

A: Land improvement- They are meant to enhance the useful life of  the land.

Q: Related to Checkpoint​ 9.1)  ​(Floating-rate loans)  The Bensington Glass Company entered into a…

A: As per the given information: Floating rate - 26 basis points (0.26 percent) over an index based on…

Q: Calculate the value of a bond that matures in 13 years and has a $1000 par value. The annual coupon…

A: Current Value of bond is calculated with the help of NPV method under capital budgeting in that…

Q: Joan Zorba orders calculators for her office supply stores. Each calculator cost $35, currently she…

A: Given values in the question:   Cost of calculator (C) = $35 Daily demand (d) = 5 Ordering cost (Co)…

Q: the onset of online/digital banking nowadays, what are the risks that people are faced with when…

A: Online banking has become the order of day and has now become the part of daily life but there are…

Q: . ▪ Movie A grossed $24 million in 1986 . • Movie B grossed $40 million in 1995 . ▪ Movie C grossed…

A: Movie B grossed in 1995 = $40 million CPI in 1995 = 152.4 CPI in 2019 = 252.0 Movie B made in 2019…

Q: The firm, Bolta Ltd, manufactures high precision specialized nuts and bolts that are customized for…

A: Weighted average cost of capital (WACC) is used as a discount rate for discounted cash flow…

Q: Economy will improve vastly next year, and that many freight customers will gradually switch from…

A:

Q: 9.5 In a private values model, argue that it is a weakly dominant strategy for a bidder to bid his…

A: A weakly dominated approach is one that produces the same or worse results as an alternative…

Q: What happens when a company learns of the bankruptcy of a customer that occurs after the year end…

A: The company prepares the financial statement at the end of an accounting period to present its…

Q: Project A - 10,000 5000 4000 3000 Project B - 10,000 4000 3000 10,000 Project C - 10,000 3000 4000…

A: Mutually Exclusive projects are reflective of all such projects which are substitutes of each other…

Q: stimate the annual required rate of return for BTO stock, using the Constant Dividend Growth Model.…

A: To calculate the annual required rate of return we will use the below formula   Annual required rate…

Q: What factors can you think of that might explain why U.S. stock markets are more efficient (i.e.,…

A: The stock market refers to the place where the shares of the various public listed companies are…

Q: Share repurchase proposal: Currently, the firm has available capital (cash and net income) of…

A: Stock repurchase  Repurchasing shares may help a stock's price remain stable, give investors their…

Q: how was the rate found?

A: Details about property are as follows: Name of Item Date of purchase Relates to which Quarter…

Q: Next year the economy will be in an expansion, normal, or recession state with probabilities 0.46,…

A:

Q: maturity. If the market rate of interest is 10%, the bonds should sell for:

A: Information Provided: Face value = $1000 Coupon rate = 12% Years to Maturity = 15

Q: In 2016, AT&T issued 10-year bonds with a coupon that pays $93.75 annually. At the time of issue,…

A: Here, To Find: Current price of the bonds =?

Q: How much would $2,875 due in 50 years be worth today if the discount rate were 7.5%? Select the…

A: Present value factor can be calculated as follows = 1/(1+i) + 1/(1+i)^2 + 1/(1+i)^3 + 1/(1+i)^n…

Q: Westpac pays a current dividend of $0.5, which is expected to grow at a rate of 4% indefinitely. The…

A: Current value of a share is the present value of future dividends and future price of the share;…

Q: What is the current yield on a zero coupon bond with a remaining life of 11 years, a yield to…

A: Par value or maturity value (Z) = $1,000 Yield to maturity (YTM) = 0.051 Maturity period (p) = 11…

Q: What would you expect the nominal rate of interest to be if the real rate is 3.8percent and the…

A: Real rate = 0.038 or 3.8% Inflation rate = 0.068 or 6.8% Nominal rate of interest = ?   Nominal rate…

Q: You have a credit card that charges an interest rate of 14.85% compounded monthly. The table below…

A: A credit card is a debt financing instrument that allows the holder to use funds and pay them back…

Q: A bond that has a face value of $1,500 and coupon rate of 4.10% payable semi-annually was redeemable…

A: We need to use bond price formula to calculate the price of bond PV =C1-1(1+i)ni +FV(1+i)n where…

Q: How much interest (to the nearest dollar) would be saved on the following loan if the home were…

A: Mortgage/ Borrowings:  Borrowings are the loans taken by an individual, from banks or non-banking…

Q: having difficulty deciding whether to put her savings in the Mystic Bank or in the Four Rivers Bank.…

A: The effective interest rate is interest rate considering after the impact of compounding on the…

Q: According to our authors, what is an unrealized gain and unrealized loss?

A: In a general view gains and losses are the outcomes of investing which are inevitable. A gain or…

Q: Which of the following statements is CORRECT? A stock's standard deviations is more relevant as a…

A: Market risk is reflecting of all such risks which can never be eliminated even through…